Since April of 2018, Amazon held the spot of the second most valuable company in the U.S only trailing behind Apple. On Thursday, Amazon’s stock was trading close to $1,800 per share throughout the day. However, after the bell its stock value plummeted about 10% down to around $1,650 due to missing Wall Street’s revenue and fourth quarter’s outlook projections.

Amazon’s disappointing third quarter earnings report caused the online retailer to lose about $65 billion off its market capitalization (currently worth around $800 billion). This allowed Microsoft to reclaim the spot of the U.S second most valuable company on Friday with a market capitalization of $821 billion. Despite the fact that Amazon exceeded Wall Street’s earnings per share expectation of $3.14 (reported third quarter eps: $5.75), according to CNBC, the company reported revenue (actual: $56.6 billion vs projection: $57.10 billion) and fourth quarter revenue guidance (actual: $66.5-$72.5 billion vs projection: $73.79) was well below Wall Street’s consensus. With the holidays season coming up, Amazon’s fourth quarter outlook tells investors that its company could see a decrease in growth.

Starting November 1st, Amazon would officially increase its minimal wage to $15 an hour for all its workers in the U.S which may impact its operating income and bottom line numbers (net income after taxes). Despite increasing its operating cost, I still believe Amazon would be able to exceed $1 billion in profits for the fifth straight quarter especially with the upcoming holiday season. I think Amazon’s stock value would rebound and reclaim its spot as the second most valuable company in the U.S from Microsoft who has seen about 25% growth this year compared to Amazon’s 40% YTD (year to date).

https://seekingalpha.com/news/3401900-microsoft-second-valuable-u-s-company?dr=1#email_link

https://www.cnbc.com/2018/10/25/amazon-earnings-q3-2018.html